Retirement planning is a primary reason for long-term saving, and when people think about retirement, finances are often the focus. However, it is important to also look at the non financial aspects of transitioning from the world of work to the world of leisure. Specifically, lifestyle changes and self esteem issues associated with the loss of your professional identity may create difficulties. As you’re preparing strategies for your future well-being, give some thought to the kind of retirement you envision for yourself.

Consider the following questions:

• What do you find fulfilling?
• What gets you out of bed in the morning?
• What are your strengths and weaknesses?
• Do you work well as part of a team, or do you thrive on solitude?
• Do you have a lot of physical energy, or do you prefer a more sedentary pace?
• Do you have a hobby you always wanted more time to pursue?

Don’t be afraid to think outside the box. This informal self-inventory may hold the key to your vision for retirement.

Challenging Conventions

The concept of retirement in America is changing. Traditionally, retirement has been idealized as a leisurely phase of life, a reward for the many years of working and raising children. This concept is based on the assumptions that people will enjoy themselves in retirement, and that work, as we commonly know it, is the province of younger generations.

However, is this concept realistic for those of us still years away from retirement, and if it is, is it what we really want? The answer might surprise you. Especially when you learn that by early 2022, roughly 1 million U.S. retirees had reentered the workforce. Now, it’s true that many retirees reentering the workforce had no choice, but for others the choice was intentional.

Rethinking retirement means reexamining conventional ideals to determine whether they apply to today’s reality and what we envision for ourselves.

Intrinsic to the conventional notion of retirement are significant assumptions about work, money, and retirement standards of living. For previous generations, work was thought to be something you did for about 45 years (until roughly age 65), and then, suddenly, you never had to (or wanted to) work again. A company pension, Social Security, and some savings generally provided enough income for funding a comfortable lifestyle in retirement, including leisure, travel, and recreation.

If that’s what you want for your retirement, there is nothing wrong with pursuing that goal. However, for some, work is too much a part of their sense of “self” to be suddenly cast aside. Moreover, with so much of their daily lives centered around work, some people have difficulty imagining their life without that structure.

Furthermore, changes in employer-sponsored retirement plans (i.e., the decline of defined benefit plans and the rise of defined contribution plans) have altered our expectations about retirement funding. The responsibility has shifted from employer to employee, which means that an individual’s long-term saving for retirement must now be factored in with other savings objectives, like purchasing a house or funding a college education for children, and ongoing financial responsibilities.

Finally, the traditional concept of retirement is based on the belief that one’s standard of living will be sustainable in retirement, and it may be for some. For others, however, it may be more practical to ask what standard of living can be maintained based on projected resources. This type of approach might help you see what is realistic (and what may be unrealistic) in your situation, and it may help you set more realistic retirement priorities. For some people, downsizing their standard of living in retirement may be acceptable. For others, however, maintaining the same standard of living during retirement as during their working years may be the goal.

Consider Phased Retirement

As you consider the traditional concept of retirement, you may discover that it doesn’t meet your needs. Phased retirement is a term coined to describe a range of employment arrangements that allow an employee who is approaching retirement to continue working, usually with a reduced workload, in transition from full-time work to full-time retirement.

Many individuals may want to continue some form of work, such as consulting, job-sharing, mentoring, or providing back-up management. Mentoring, in particular, enables an individual to transfer a lifetime of learning and experience to a friend, relative, or younger colleague. Aside from money earned from continued work, phased retirement may help you maintain a feeling of involvement in the world and may provide a sense of purpose.

For some, phased retirement may be an option. For others, it may be a necessity. For still others, phased retirement may provide structure to daily life and the opportunity to explore other activities while maintaining a meaningful role within an organization, the community, or society in general.

What’s most important, however, is to define your vision of retirement in a way that makes sense to you and is realistic considering your goals and resources.

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Women face unique financial challenges as they age. When compared with men, women live longer, earn less, and spend fewer years in the workforce. Financial concerns are often more acute for older women who are divorced, widowed, or otherwise single, as well as for those who have spent all or a significant portion of their adult years caring for children and other family members. Consequently, planning for long-term care (LTC) is an issue of particular importance.

LTC assists people, through various support services, with activities of daily living, such as dressing, bathing, eating, transferring, and toileting. If a woman has difficulty performing two or more of these activities due to physical limitations, cognitive impairment, or both, LTC may be needed. LTC services are provided in the community, in an assisted living facility, or in a nursing home.

Most people are unaware of the actual costs associated with LTC. For example, according to the American Association of Retired Persons (AARP, 2009), the average cost of a nursing home is $75,192 per year, and the average cost for assisted living is $2,968 per month. It is important to note that these figures are national averages. Actual costs vary widely from state to state. If cost of living is high an area, it is likely that costs for long-term care services will be well above the national average.

There are a number of reasons why it is important for women to plan for LTC.

First, women live longer. Back in 1900, women and men shared a similar life expectancy of about 47 years. Today, the longevity of both men and women has increased overall by 20 years, with the life expectancy for women generally five years longer than men. The U.S. Census Bureau (2009) reports that women represent 57% of those aged 65 and older, and 67% of those aged 85 and older. Unfortunately, with longer life comes an increased risk of health problems. In fact, the Administration on Aging (AoA, 2009) reports that women are twice as likely as men to live in a nursing home. They are also more likely to sustain a disability or be diagnosed with a chronic health condition.

Second, women often lack the resources necessary to fund the care needed later in life. According to the U.S. Department of Labor (DOL, 2009), the average woman in the U.S. who is employed full-time earns less than her male counterpart (80 cents for every dollar a man earned in 2007). In addition, women typically spend nearly 12 years out of the workforce while taking care of children or elderly parents. It is not uncommon for many women to spend years juggling family, professional, and caregiving responsibilities, and as a result, their income is disrupted, hindering their ability to save money or attain financial stability.

Finally, shorter careers and lower incomes often result in lower Social Security benefits. According to the Social Security Administration (SSA, 2009), the average annual Social Security income received by women 65 years and older was just $10,685 in 2007. Moreover, married women often don’t know that the benefits accrued by their husbands may be reduced if they are widowed or divorced. These factors put many women at high risk for poverty as they age, especially if they do not plan accordingly.

Many women think their children or other relatives will be there for them, should the need for LTC arise. But even if the willingness is there, the costs associated with caregiving often exceed the financial capabilities of the average family. And, if medical care is required, family members may not have the necessary skills to provide care. As you can see, the time has come for women to look toward the future and prepare for LTC.

The Insurance Alternative

The good news is there is an alternative. LTC insurance can help cover LTC expenses before you meet the strict requirements for Medicaid eligibility. Many policies cover the costs of nursing homes, assisted living/residential care facilities, adult day-care centers, and/or home care. The cost is typically based on your age, your current health, and specific policy features, such as scope of coverage, levels of care, and duration of benefits. LTC insurance is designed to help you maintain your independence and quality of life, while offering increased options for care.

Needless to say, it is difficult to prepare for the possibility that you may one day need LTC. While you don’t know what the future holds, planning today for an uncertain tomorrow may help preserve your assets, increase your options for care, and perhaps most importantly, bring you and your loved ones peace of mind.

Copyright © 2022 FMeX.

For many people, the New Year is a time for personal reflection, a time to consider commitments and resolutions for the coming year. This year, why not resolve to make your finances a priority? With proper planning and appropriate guidance, you can begin to build financial stability and prepare for the uncertainties of tomorrow.

Consider the following steps:

1. Get Organized. Gather all your important financial documents – life insurance policies, homeowners insurance, wills, trusts, and other pertinent financial records – and organize them so you can access them quickly and easily.

2. Schedule a Legal Consultation. Arrange a time to meet with your attorney to review or write your will and establish any necessary trusts. Prior to your meeting, discuss with your spouse or other loved ones how to handle property dispositions and guardian appointments.

3. Keep Debt in Check. Pay off high interest debt first, especially if the interest is not tax deductible. Do your best to avoid the minimum payment trap. By making only the minimum monthly payment, the interest that accumulates over time can make even “bargain” purchases costly in the long run.

4. Review Insurance Coverage. Review your life insurance policies to ensure that your beneficiary designations are appropriate to your current situation and that all arrangements are up-to-date. Also, consider repaying any loans you may have against your insurance policies. This can help to reestablish an emergency fund for the future.

5. Apply for Scholarships. If your children plan to attend college next year and require financial aid, remember that financial aid forms are due early in the year. The earlier you apply, the better your chances may be for obtaining aid.

6. Prepare a Tax Strategy. Begin to gather your tax information and arrange a time to meet with your accountant, if necessary. It is important to file your income taxes on time and to be aware of any tax changes that may affect your return.

7. Write It All Down. Once you’ve met with your financial, insurance, and tax professionals, write down a few realistic goals that you think are achievable. Make the commitment now to plan your finances accordingly. This is your first step to building a solid financial future.

The New Year offers us a fresh beginning. This year, resolve to make your finances a priority. With proper planning and appropriate guidance, you can begin to work toward financial independence and prepare for life’s uncertainties.

Copyright © 2022 FMeX.